IMF predicts Vietnam's economic growth to reach 6.1 per cent in 2024

According to a report released by the IMF on September 27, domestic demand growth is expected to recover gradually in Vietnam as corporates navigate through high debt levels, while the real estate sector will only fully recover over the medium term. Inflation is expected to hover around the State Bank of Vietnam’s target of 4-4.5 per cent this year.

However, downside risks are high. Exports, a key driver for Vietnam’s economy, could weaken if global growth disappoints, global geopolitical tensions persist, or trade disputes intensify. Given easy monetary conditions, if exchange rate pressures were to persist for longer, it could lead to a larger pass-through to domestic inflation.

Persistent weakness in the real estate sector and corporate bond market could weigh more than expected on banks’ ability to expand credit, hurting economic growth and undermining financial stability.

The IMF's executive directors commended the Vietnamese authorities’ swift actions to maintain macro-financial stability after the economic recovery from the pandemic faced domestic and external headwinds. They noted that risks remain elevated, and that further efforts are required to safeguard macro-financial stability and deepen reforms to address vulnerabilities and ensure robust, green, and inclusive growth over the medium term. Continued capacity development will be important to support reforms.

Given ample fiscal space and limited room for monetary policy loosening, fiscal policy should take the lead in supporting economic activity if needed. In this context, the IMF's executive directors welcomed the authorities’ plans to speed up the implementation of public investment, which will require tackling bottlenecks, and stressed the importance of expanding social safety nets to support the most vulnerable. They also recommended strengthening the fiscal framework and budget process and increasing revenue mobilisation over the medium term to support the ambitious development agenda.

In addition, Vietnam has also made structural and climate reforms to achieve sustainable, green, and inclusive growth. Accelerating the transition to upper-middle income status will require further efforts to improve the business environment, step-up critical infrastructure, and invest in human capital. The latest Power Development Plan and the planned Emissions Trading System can help achieve Vietnam’s climate goals and promote energy security.

The IMF says it is vital for Vietnam to move ahead with implementation of the strategy and develop the appropriate regulatory framework to promote investment in renewable energy and secure funding for the green transition. Conducting a climate-public investment management assessment would be useful.

Citi estimates robust macro prospects heading into 2025 Citi’s mid-year research on Vietnam’s economic outlook has affirmed its initial projections for the country.

HSBC raises Vietnam's 2024 GDP growth forecast to 6.5 per cent HSBC has raised its 2024 GDP growth forecast for Vietnam to 6.5 per cent (from 6.0 per cent) and maintained its 2025 GDP estimate at 6.5 per cent.

Vietnam's GDP may slow up to 0.5 per cent due to Typhoon Yagi The impact of Typhoon Yagi may reduce Vietnam's 2024 GDP growth by between 0.2 per cent to 0.5 per cent, according to a report released by Mitsubishi UFJ Financial Group (MUFG) on September 16.